Constellation Energy Group, Inc. (CEG) announced that it has repaid a $500 million, 6.125% fixed-rate bond solely through internal accruals. This is in-line with the company’s aim to improve liquidity and strengthen the balance sheet.

Constellation Energy was able to reduce the total debt level from $8.5 billion at year-end 2008 to below the $7 billion mark after the first half of fiscal 2009. The debt-loaded company with a debt-to-equity ratio of 134.6% after the first half of fiscal 2009 dished out $143.9 million in interest expenses during the recent second quarter of 2009 compared to only $78.8 million in the year-ago quarter.

The pain may get even worse with the July 2009, downgrade by Fitch Ratings, bringing Constellation Energy’s senior unsecured debt rating from BBB to BBB- and BGE’s senior unsecured debt rating from A- to BBB+.

With more than $1.5 billion of debt lined up for maturity this fiscal year, the company may have to resort to refinancing its debt. To tide over the debt-maturity storm, CEG is pro-active in increasing its credit facility from approximately $5.6 billion after the first half of fiscal 2009. It added another $500 million in August 2009.

However, all the resource crunch will be solved if the pending deal for selling half of the company’s nuclear business to EDF Group for $4.5 billion goes through. A final decision will be taken by the Maryland Public Service Commission in October 2009.

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